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With red-carpet flourish and speeches by top U.S. and Iraqi officials, the United States celebrated the next step in the U.S.-Iraq diplomatic relationship with the dedication of its sprawling new embassy in Baghdad on Monday. The 104-acre complex is the largest U.S. embassy in the world. "Today is about more than raising a flag and dedicating an embassy. It is about new direction and a new future," said U.S. Ambassador to Iraq Ryan Crocker, standing on an outdoor stage with Iraqi President Jalal Talabani and U.S. Deputy Secretary of State John Negroponte. "In the security agreement, we have made commitments, and we will fulfill those commitments while continuing to assist Iraqi forces in maintaining security."

"This structure that you have built is not only a part of this embassy but a symbol of the deep and great affinity between the American and Iraqi peoples," Talabani said during his speech. (See pictures of Iraq's revival.)

The new embassy complex (NEC in embassy-speak), where the gathering took place, is symbolic of Iraq's importance: it is enormous. It is also a testament to the continued fragility of the country Washington seeks to build an alliance with. The structure is heavily fortified. From the outside, it resembles an austere, sand-colored fortress. From the inner courtyard, small symmetrical windows are covered by heavy screens that shelter the buildings from incoming rockets and mortars. One U.S. soldier said it reminded her of a maximum-security prison. "If my parents could see this, they wouldn't be so worried," said another.

The $700 million complex within the Green Zone is a significant step away from the U.S. government's former headquarters in Saddam Hussein's ornate, marble-filled republican palace, which was handed back to the Iraqis when the clock struck midnight on New Year's Eve. The new place is stark and practical  like a "straightforward business office," except with heavy security, says Master Sergeant Patrick McDonald, who heads the embassy's work on the upcoming Iraqi elections. He adds, "In a way, you sort of miss the touch of Saddam."

For Monday's ceremony, a long red carpet snaked along a dusty walkway from the heavily fortified front gate to a large white tent specially set up for the occasion. There, embassy personnel, Iraqi officials in suits, contractors in khakis and soldiers in fatigues milled about, munching on mini quiches and kabobs served by waiters in vests and bow ties.

Guests were urged to visit an exhibition on the history of U.S.-Iraq relations in the next building over, where framed photos and copies of cultural and diplomatic agreements between the two countries document a rosy exchange from the 1930s to 2008. The more awkward moments in U.S.-Iraq history  like U.S. support of Saddam during the 1980s Iran-Iraq war and the troubled early years of U.S. occupation  were left out.

Iraqi Prime Minister Nouri al-Maliki was absent from the ceremony. On Monday he was scheduled to return from a two-day visit to the U.S.'s adversary, Iran, where he met with Iranian President Mahmoud Ahmadinejad and Supreme Leader Ayatullah Khamenei. According to Iranian state news agency IRNA, Khamenei told al-Maliki on Sunday that the U.S. presence in Iraq was the root cause of terrorism, and that the U.S. seeks to establish a permanent base there to dominate the region. He urged further political and economic cooperation with Iran.